Tag: Environmental Regulation Panel

By Natasha Affolder, Professor of Law, University of British Columbia

Scholarship on responsive regulation has now enriched our understanding of many diverse regulatory spaces: the individual firm, certain industries, local and regional geographies, the levels of national, and even global, business regulation.  Legal scholars have mapped out parallel terrains, explaining how environmental law operates locally, at the state or provincial level, nationally, and as a field of international law.  Yet little focussed attention has been devoted by scholars of environmental law and regulation to large projects – major infrastructure and natural resource projects that form unique and project-specific regulatory spaces.

The purpose of this paper is to explain why large projects merit the attention of scholars of environmental law and regulation.  Large projects provide ‘strategic research sites’ for in-depth examinations of regulatory webs in action.  They offer particularly rich terrain for understanding the interplays between state regulation and private orderings, as well as hybrid forms of regulation.   Project-specific research also reveals the transnational forces at work in regulatory regimes.  Critically, large projects highlight the importance of contracts as a regulatory tool.   

The magnitude of many large projects leads to the introduction of specific regulatory regimes to respond to their size and complexity.  The Three Gorges Dam.  The Chad Cameroon Pipeline. Uganda’s Bujagali Hydropower Project.  The Baku-Tbilisi-Ceyhan (BTC) Caspian Pipeline .  Canada’s proposed Mackenzie Valley Pipeline.  These examples remind us that large projects are often the sites of social and environmental conflict and provide critical venues for exploring  the interplay of financial and environmental regulation.  This paper draws on a range of project-specific examples to illustrate the diversity and density of forms of environmental regulation that are emerging in project settings.

In recent years, explaining why companies are “different shades of green” (to use Neil Gunningham’s phrase) has been a significant scholarly endeavour.   Project-specific research allows us to ask a further question: why do the same companies behave differently in different project contexts?  Crucially, the importance of large projects to developing countries also invites us to extend our understanding of how and when responsive regulation works (and doesn’t) beyond the Western world.

By Benjamin J. Richardson, Osgoode Hall Law School, York University

The long-standing movement for socially responsible investment (SRI) promises to be a means of environmental governance, by promoting consideration of environmental costs and benefits when financiers fund corporate developments. In recent years, some governments have begun to recognize this potential by introducing forms of responsive regulation, such as informational and incentive policy mechanisms, that aim to encourage voluntary action by financiers.

But governments in common law jurisdictions have yet to alter the core fiduciary (trust law) duties of the trustees and fund managers in investment institutions, which continue to pose a barrier to SRI. Until now, fiduciary duties have been seen as a hindrance because the obligation to “invest prudently” has been understood as mandating the highest financial returns. Thus, environmental and social issues usually only receive attention if they can be perceived as “financially material” (ie, financial risks or opportunities) for investors.

Another legal dimension of fiduciary finance that has not been adequately appreciated as an influence on SRI is the weight to be attached to the will of beneficiaries. While it might seem intuitive that SRI should be legally permissible if that is the preference of beneficiaries in a pension fund or other financial institution, trust law in fact thwarts the democratic process in investment decision-making. While trust law requires trustees to promote the “best interests” of beneficiaries, it does not strongly recognize any rights of beneficiaries to be consulted or to issue instructions to trustees or fund managers. Moreover, the duty to treat beneficiaries even-handedly can hinder responding to beneficiaries when they are not unanimous in their views.

If we wish to harness SRI as a means of “responsive” environmental governance, governments will need to reform fiduciary norms to ensure that the decision-making processes of financial institutions are more democratic, transparent and accountable to goals beyond the mere “bottom line”.